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Groupon: Not Really a Bad Business but Bad Business Model!

There is always a huge uproar and chaos over the Groupon business, whether it is a bad business or a bad business model! However, there is no clear winner yet. With the comments and discussions pouring down from all corners of the world, I thought of sharing what I personally feel about this on-going criticism over Groupon business and its future. From my point of view, failure of any single business can’t transform the credibility or worth of that business. There could be varieties of reasons for the failure. It doesn’t mean if a business fails, it is difficult for others to take it up and succeed. But, learning the lessons from the failed business could rather help you set up high time records with ease. With said that, I’d wish to get into the topic.

Groupon Business Model

Misconception over bad business and business model:

I’d rather stress the heading again, and I strongly believe that it isn’t the business that is bad but the business model. With a proper approach and perfect strategy, deal business can become a perfect treat to watch out for. But, Groupon’s failure was due to business model it possessed. It wasn’t any difficult to copy the Groupon’s business model and it paved way for its destruction. Also, the business model is not free from flaws as well. Initially, when Groupon set up the daily deal business, it had roaring sales and customers flooding from all over the world. But, due to the flawed business model possessed by it, Groupon eventually lost its credit in a short period of time. The easy-to-copy model was adopted by its rivals perfectly which played the spoilsport on Groupon.

Poor customer service, strategic planning led to Groupon’s downfall:

To be honest, Groupon failed to capitalize on the success it had experienced after the commencement of the daily deal business. Initially, everything was going extremely feasible for it, but things changed dramatically when the customer base increased beyond the expected range. Groupon failed to strategize its business model as a result it fell short of customer, vendor expectations. At one stage, it failed to cut payments to vendors and offered non-quality products to customers to meet the growing demand. To add more woes to the insult, the customer service wasn’t up to the mark. So, the total workmanship over the 4 years was completely ruined in a matter of few months. With said that, Groupon may never ever bring in any surprise with deals again. As the entire problem encompasses on the business model, there is no point in arguing the business itself is a bad one.


Today, you’ve plenty of companies that are very similar to Groupon, yet they are packed with handful of returns as they’ve strategized their business models thoroughly. The downfall of Groupon is still acting as the eye opener for many businesses and it helped most deal businesses to succeed with ease. To sum up, I’d like to emphasize a strong point, if the business itself is bad, no one would’ve dared to take it up. But, today, the companies setting up daily deals are increasing tremendously and it could mean only that, it is not the business but the model that measures the success or failure of the deal business. I hope whatever points I’ve discussed here were useful to everyone reading it.

Author bio:-

This article is contributed by Melvin Rajiv, content expert providing technology solutions on Group Buying Software. He has also started write for Magento Booking System

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